UK to overhaul ways of funding research and development

Business secretary Kwasi Kwarteng will on Thursday signal a fresh shake-up of the network of bodies used by the UK government to finance research and development, as he unveils initiatives to boost British competiveness after Brexit.

It was only three years ago that the government led by Theresa May reorganised the sector to create a new super-quango dedicated to funding innovation.

Ministers then merged Innovate UK and Research England with the UK’s seven research councils to create an over arching national funding agency called UK Research and Innovation with a £6bn budget.

But Boris Johnson’s government has drawn up legislation to set up a rival “blue-skies” scientific research agency that will invest taxpayers’ money in cutting-edge technologies such as artificial intelligence.

If we get this right, we can build the foundations for the new industries of tomorrow.

The new body, called the Advanced Research and Invention Agency, with an £800m budget over four years, was originally pursued by Dominic Cummings, the prime minister’s former chief adviser.

Kwarteng’s innovation strategy involves an independent review that would “assess the landscape of UK organisations undertaking all forms of research, development and innovation”.

He will say it is the government’s job to ensure the UK keeps pace with the “global innovation race”, adding: “If we get this right, we can build the foundations for the new industries of tomorrow, and ensure British firms are at the front of the pack to turn world-leading science into new products and services that are successful in international markets.”

The government has said it is committed to increasing public investment in R&D to £22bn each year.

However a recent study by the Higher Education Policy Institute, a think-tank, found the UK was likely to miss its target of spending 2.4 per cent of gross domestic product on research and development by 2027.

Kwarteng’s innovation strategy outlines seven strategic technologies that major on existing UK R&D strengths, including robotics, genomics, AI.

The strategy also proposes “high potential individual” and “scale-up” visas to enable “internationally mobile” entrepreneurs to work in the UK.

Separately Kwarteng and Lord David Frost, Cabinet Office minister, will on Thursday set out a post-Brexit UK regulatory approach, including reviving the “one in, two out” model for cutting red tape.

Kwarteng will announce that new regulations would in future be framed using a “proportionality principle”, marking a break from what he claims is the EU’s excessive use of the “precautionary principle”.

He is also looking to make more use of regulatory “sandboxes” where certain rules are lifted to test new products in markets under the supervision of watchdogs.

Some of the agenda was possible before Britain left the EU: David Cameron’s coalition government introduced the model of scrapping two regulations for every new one, but the policy atrophied after he left office in 2016.

Kwarteng and Frost jointly drew up the deregulation plan in response to a report by a task force led by former Tory leader Iain Duncan Smith.

Frost said that “for the first time in a generation we are free to implement rules that put the UK first”.

Joe Marshall of the Institute for Government, a think-tank, said the “one in, two out” regulatory model was open to being “gamed” by officials who might look for trivial old rules to jettison to make way for big new regulations.

Although he welcomed initiatives such as the expansion of the “sandbox” approach, he said the new regulatory policy also carried risks, since the more Britain diverged from Brussels’ rules, the greater the likelihood of friction at the border with the EU.

Marshall said in a paper last month: “Divergence from EU rules in Great Britain could deepen the border down the Irish Sea, with Northern Ireland still obliged to follow many EU rules on goods.”